US President Donald Trump has initiated a comprehensive investigation into the persistent trade deficits affecting the United States, as outlined in the newly released ‘America First Trade Policy’ memorandum. This directive emphasizes the economic and national security implications of these deficits, particularly focusing on trade relationships with key partners like China and India.
India’s textile and consumer goods sectors are poised to feel the impact of this policy shift. In 2023, India recorded a significant $50 billion trade surplus with the US, a stark increase from $25 billion in 2019. However, Indian trade experts warn that sectors such as textiles, pharmaceuticals, gems and jewellery, and marine products could face heightened vulnerability to US tariffs due to this growing trade imbalance.
During his previous administration, Trump had already leveraged national security concerns to impose substantial tariffs—25% on steel and 10% on aluminium—affecting India and other nations. The revocation of the Generalized System of Preferences (GSP), which previously benefited Indian exporters, further complicates the landscape for textile exports.
The memorandum tasks the Secretary of the Treasury and the Secretary of Commerce with exploring the establishment of an External Revenue Service (ERS) aimed at enhancing tariff collection mechanisms. Additionally, it mandates a review of existing trade agreements to ensure that they align with US interests, potentially leading to revisions that could affect international trading partners.
In parallel, Trump’s administration is scrutinizing China’s compliance with previous trade agreements. The US Trade Representative (USTR) has been directed to assess whether China is adhering to its commitments, with recommendations for action—including potential tariffs—expected based on these findings.
The implications of these developments extend beyond immediate tariff threats; they signal a broader reevaluation of global trade dynamics. With India’s participation in initiatives like the Indo-Pacific Economic Framework (IPEF), which aims to bolster economic cooperation across the region, Indian exporters must navigate an increasingly complex and potentially hostile trade environment.
As Trump’s administration embarks on this ambitious review process—with findings due by April 2025—the textile industry in India and beyond must prepare for possible shifts in trade policies that could reshape their operational landscapes significantly.
